Apple posts record sales after Tim Cook steps down – but chip shortage looms

Apple reported a record quarter on Thursday. But outgoing CEO Tim Cook has warned that storm clouds are gathering in the form of memory chip supply issues that could impact the business in the near future.

“Today, Apple is proud to report our best March quarter on record, with revenue of $111.2 billion and double-digit growth in every geographic segment,” Cook said on Thursday’s earnings call. “Supported by such exceptional demand for the iPhone 17 lineup, iPhone delivered record earnings for the March quarter.”

Cook was less optimistic, saying that Apple spent more on memory chips in March than in previous quarters, but that the company’s costs were offset by its ability to sell stockpiled inventory. However, he warned that “memory costs are expected to rise significantly” from June onwards, which could “increase the impact” on the business.

Cook was referring to what is commonly referred to as “Ramageddon,” a trend in which the AI ​​industry is gobbling up memory chips at an alarming rate, fueling shortages. This is driving up hardware prices. Apple is primarily a hardware company, so this is obviously not good news for the company’s core products.

Most notably, the chip shortage affected the iPhone. Despite the strong sales that Apple touted on Thursday, it was previously reported that the cost of RAM has quadrupled, impacting the cost of manufacturing phones and putting Apple’s incoming CEO John Tarnas in a less-than-enviable position.

One possible outcome could be for Apple to increase the price of its iPhones. “Right now, there’s a little bit less flexibility in the supply chain to get more parts,” Cook told Reuters on Thursday.

Tarnas, who previously served as Apple’s senior vice president of hardware engineering, attended Thursday’s earnings call and praised Cook. “Tim is, in my opinion, one of the greatest business leaders of all time. It is an incredible honor to step into the role of CEO, and it means a lot to me to have Tim’s trust and confidence,” said Tarnas.

When he starts work on September 1st, his workload will obviously be reduced. But Cook’s supply chain experience will be relied on for a while. Mr. Cook will become executive chairman.